US proposes sharp hike in H-1B, PERM wage thresholds; may adversely impact entry-level hiring
In a significant move that could reshape hiring of foreign skilled professionals, the US Department of Labor (DOL) has proposed a sweeping overhaul of wage rules for H-1B visas and employment-linked green card programmes, sharply increasing minimum salary thresholds across skill levels.The proposed rule, titled “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States,” was released on March 26 and will be open for public comments for 60 days after its publication in the Federal Register.
What the proposal seeks to change
At the core of the proposal is a revision of the prevailing wage system, which determines the minimum salary employers must offer foreign workers. Currently, wages are pegged to four skill-based levels set at roughly the 17th, 34th, 50th and 67th percentiles of market wages. The DOL now proposes to raise these thresholds significantly, effectively pushing wages upward across all levels.For instance, entry-level (Level I) wages could rise from the 17th percentile to the 34th percentile, aligning them with what is currently considered a mid-level wage. The DOL estimates that these changes would increase the average certified wage by approximately $14,000 per year per position.DOL Prevailing Wage Levels: Current and Proposed
| Skill Level | Current Percentiles | Proposed Rule Percentiles |
|---|---|---|
| Level I | 17 | 34 |
| Level II | 34 | 52 |
| Level III | 50 | 70 |
| Level IV | 67 | 88 |
Aim: curb ‘cheap labour’ practices
The DOL said the changes are intended to bring foreign worker wages in line with US market rates and prevent misuse of visa programmes. “This proposed rule will help ensure that employers pay foreign workers wages that reflect the real market value of their labor,” said US Labor Secretary Lori Chavez-DeRemer.The department argued that existing wage levels have been “dramatically below” market rates, particularly affecting entry-level US workers and recent graduates. It added that the overhaul aims to reduce incentives for employers to replace US workers with lower-paid foreign labour and promote fair competition.
Who will be impacted
The proposed rule will apply to multiple visa categories and employment routes, including H-1B (specialty occupation workers) and employment-linked green cards. Importantly, the changes will apply only to new applications filed after the rule takes effect, not to existing approvals.Mitch Wexler, senior counselor at global immigration law firm Fragomen, told TOI: “The proposed revised percentiles are nearly identical to the percentiles proposed in the final wage rule issued at the end of the first Trump Administration, which was challenged in court and ultimately never took effect.”Employers sponsoring H-1B workers must submit a labour condition application (LCA) to the DOL, stipulating that they will pay at least the prevailing wage for that job and location. Similarly, PERM (Program Electronic Review Management) is a labour certification process employers must complete before sponsoring a foreign worker for a green card, which also requires offering the prevailing wage. The proposed regulation would significantly raise the required minimum wages for both H-1B hires and green card sponsorships.“The new required wage levels would apply only to applications for prevailing wage determinations that are pending on the date the regulation would take effect, and to new prevailing wage requests and labour condition applications (LCAs) filed on or after the effective date of the regulation. The new percentiles would not apply to any previously issued or approved prevailing wage determinations, PERMs, or LCAs,” said Wexler.
Potential salary impact
The DOL estimates that the proposed wage level adjustments would increase the average certified wage by approximately $14,000 per year per position. Overall, the policy could result in billions of dollars in additional wage payouts by employers each year, with the biggest impact expected at lower wage levels. This would make hiring of H-1B workers, especially at entry levels, more expensive.The proposal is not yet final and will undergo the federal rulemaking process, including a public consultation period and potential revisions. Immigration experts do not rule out legal challenges to the rule.Lately, the H-1B programme has been subject to multiple changes — including the replacement of the random lottery with a wage-weighted selection system, where higher prevailing wage levels improve selection odds; a $100,000 entry fee on new H-1B petitions for beneficiaries outside the US (a measure still under legal challenge); and social media vetting of H-1B/H-4 applicants, which has contributed to consular backlogs in India. The proposed wage hike will be yet another policy change that could impact hiring of skilled foreign workers.
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